New York gets tough on unemployment benefits abuse

Even as officials say that the nation and state are limping out of the Great Recession, unemployment insurance is a lifeline for millions.

By James Nani

recordonline.com

By James Nani

Posted Mar. 10, 2014 at 2:00 AM
Updated Mar 10, 2014 at 4:59 PM

By James Nani

Posted Mar. 10, 2014 at 2:00 AM
Updated Mar 10, 2014 at 4:59 PM

» Social News

CORRECTION: Shawn Gloster appeared March 6 in Wallkill Town Court to answer charges of felony grand larceny. Another man was misidentified as Gloster in a photo on Page One of Monday’s editions.

Above is a New York State Police photograph of Shawn Gloster.

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KINGSTON — Unemployment.

Even as officials say that the nation and state are limping out of the Great Recession, unemployment insurance is a lifeline for millions.

As the need has grown, parallel efforts to crack down on abusers have been under way.

Take the case of Shawn Gloster, 34, of Middletown. He was arrested on Feb. 25. State police said they received a complaint from the state Department of Labor. The complaint said that in 2010 and 2013, Gloster said he was unemployed when he was actually "gainfully employed by a business in Middletown."

State police say the state Department of Labor generally hands down affidavits after they've done investigations, and police then do their best to pick up the accused.

Sullivan County District Attorney James Farrell says he's seen the state crackdown increase since 2010, and that his office usually seeks to get that money back.

"You're basically stealing from people that would get the benefit," Farrell said of the abusers. "Restitution is a main component of all these prosecutions."

Efforts to rein in unemployment costs have been ramped up in other areas, as well. Starting in October 2013, New York enacted several new changes to its unemployment insurance program in the wake of having to repay $3.5 billion loaned from the federal government to keep its Unemployment Insurance Trust Fund solvent after the recession.

By law, employers are responsible for paying back this money, with interest, to the federal government.

Among the reforms were new fraud-prevention measures, requiring workers to look for work more aggressively, an alternative to fully laying off workers during lulls in business and tighter deadlines on employers to answer claims.

Charges by the federal government are billed to employers at a flat rate through higher Federal Unemployment Tax Act rates and interest assessments.

The reforms are basically a way of paying back the debt to the federal government faster, by 2016 instead of 2018, to reduce the interest payments.

In the Hudson Valley, the reforms are said to translate into $41 million in savings over 10 years, according to the state Department of Labor.

And according to an annual report by the New York State Task Force on Employee Misclassification, issued Feb. 1, the state Department of Labor completed more than 13,000 audits and investigations in 2013.

In addition to those, the state Department of Labor completed more than 2,200 fraud investigations, discovering nearly $271.2 million in unreported wages and nearly $10 million in unemployment insurance contributions due, according to the report.

That number has been holding fairly steady.

In 2012, the state Department of Labor completed 2,200 fraud investigations, finding more than $214.9 million in unreported wages and more than $7.9 million in unemployment insurance contributions due.

In 2011, it completed 2,255 fraud investigations showing over $327.4 million in unreported wages and over $13 million in unemployment insurance taxes due.

That task force is made up of the state Department of Taxation, Department of Labor, Workers' Compensation Board, Attorney General's Office, and Comptroller of the City of New York.

But even as fraud investigations range in the thousands, Ulster County Public Defender Andy Kossover said his office doesn't see too many of these types of cases.

He says prosecutions have been fair, but that sometimes, the average person might not be aware of the rules.

"I see it, but it's not too common," Kossover said. "The rules and regulations are complicated — that someone may not be aware that failing to report that a $50 payment for snow plowing is criminal conduct."

The crackdowns aren't just coming to individuals, either.

In 2013, the state Department of Labor found nearly 127,000 "misclassified" workers and unpaid contributions due of nearly $55.1 million.

Those ranged from cases of strippers being paid in cash tips to delicatessens paying workers off the books, according to the task force report.

In the long run, Farrell said, fleecing the system comes out of everyone's pocket.